US Inflation Numbers Alter Traders’ Expectations

Traders have adjusted their expectations for the Federal Reserve’s pace of interest rate cuts
this year following surprising inflation data.

Contents:

Inflation
Gold
Oil

Inflation

The likelihood of a rate cut in the September meeting has increased and come earlier than anticipated. Yields on two-year Treasury bonds fell by up to 15 basis points, reaching 4.68%, after Wednesday’s report showed an unexpected slowdown in May’s inflation. The market has re-evaluated the Federal Reserve’s interest rate projections, with increased probabilities for cuts in November and December, and a 76% chance for a rate cut in September.

Gold

Divergent Movement in Gold Prices Yesterday:

Following the release of the Consumer Price Index (CPI) data, gold prices rose.
Although the Federal Reserve scaled back its expectations from three interest rate cuts to just one this year,
the Federal Open Market Committee (FOMC) anticipates a 25 basis point cut this year,
a 100 basis point reduction next year in 2025, and has raised its inflation forecast for this year.

Federal Reserve Chairman Jerome Powell tried to calm the markets,
emphasizing that forecasts should not be fully relied upon, stating,
“We don’t have confidence in our forecasts.” He noted that the Federal Reserve retains enough flexibility to take additional actions, including rate cuts, depending on the speed of inflation’s slowdown and the labor market’s deterioration.

Following Powell’s remarks, gold prices, which initially surged, later settled.
Gold was priced at $2,322 per ounce, registering a 0.25% increase at 10:07 AM Saudi time.
In contrast, Brent crude oil prices rose by 0.72% to $82.50 per barrel,
while West Texas Intermediate (WTI) crude stabilized at $78.42 per barrel.

Oil

Oil Trades Lower Today After Yesterday’s Gains:

Itprices declined in Asian markets on Thursday after official data revealed an unexpected rise in US crude oil inventories. The International Energy Agency (IEA) also indicated a projected supply surplus in the future, negatively impacting the oil demand outlook for 2024.

However, significant losses in crude oil prices were mitigated by the depreciation of the dollar following weak inflation data, despite the Federal Reserve’s significantly lowered rate cut forecasts for 2024.

On the New York Mercantile Exchange, July crude oil contracts were trading at $78.19 per barrel at the time of this report, reflecting a 0.39% drop. Earlier, crude oil had traded as low as $78.06 per barrel. Crude oil could find support at $75.21 and resistance at $79.32.

US Inflation Numbers Alter Traders’ Expectations

US Inflation Numbers Alter Traders&#8217; Expectations

Related Topics

US Inflation Numbers Alter Traders’ Expectations